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ICICI Securities

Published on 30/10/2020 12:12:32 PM

Rollover Highlights

* Nifty rolls were near 77% vs. 3M average of 76%

* Marketwide rolls were at 93% against the 3M average of 92%

* Highest rollover was seen in Dabur India, Torrent Pharma Siemens, Marico and Ramco Cement

* Rollover activity was relatively low in Coforge, Petronet LNG, Godrej Consumer Products, Cummins India and Mindtree

* Among index stocks, Grasim (99%), HDFC Life (99%) and Adani Ports (99%) are witnessing high rolls into the next series while TCS (79%), Britannia (83%) and ACC (86%) are seeing relatively low rollover into the November series

* The open interest in the Nifty has increased sharply compared to the last month at inception. The November series is starting with open interest close to 10 million against 8.5 million shares seen in the last series. Nifty November futures added almost 3 million shares during the settlement trade. However, the roll spread has come under pressure and Nifty November futures closed flat with respect to spot indicating short rollover

* The open interest in the Bank Nifty has remained almost unchanged compared to last month. The new series OI is close to 1.6 million shares. The roll spread in the banking index has remained under pressure suggesting short rollover of positions. However, we believe the banking space will outperform the Nifty

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ICICI Securities

Published on 30/10/2020 12:10:55 PM

Technical Outlook

Equity benchmarks extended losses over second consecutive session and concluded October series derivative expiry session on a subdued note. The Nifty ended the session at 11671, down 59 or 0.5%.In the coming session, holding above Thursday’s low (11606) would keep technical pullback option open, else extended correction amid stock specific action. Hence, intraday dip towards 11592-11616 should be used to create long position for target of 11708.

Going ahead, we believe bias would remain corrective as long as index maintain a lower highlow formation and extend the ongoing price and time-wise correction towards key support threshold of 11500 in coming weeks as it is confluence of 38.2% retracement of last up move (10790-12025), at 11553 coincided with 50 days EMS placed at 11524. Meanwhile, 12000 would continue to act as immediate hurdle as on seven out of fourteen sessions index made failed attempt to surpass psychological mark of 12000, which clearly signifies profit booking at higher levels.

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ICICI Securities

Published on 30/10/2020 12:09:57 PM

Bank Nifty: 24092

Technical Outlook

* The Bank Nifty witnessed profit booking for the second consecutive session and closed the monthly expiry session lower by 0 . 6 % on Thursday amid weak global cues . The Bank Nifty ended the session at 24092 , down by 140 points or 0 . 6 % 

* The daily price action formed a high wave candle with a lower high -low signalling continuation of the breather for a second consecutive session .

* The index is currently placed near the lower band of the last seven sessions range (24800 -23800 ) . Index holding above the lower band of the range will lead to continuation of the current consolidation . Failure to do so will result in extension of the current breather towards the support area of 23000 in the coming sessions

* Post faster retracement of the last falling segment as four sessions decline (24190 -22970 ) was completely retraced in just two sessions . The index has spent past seven sessions retracing the sharp up move of mid October (22971 -24823 ) by just 50 % . The shallow price retracement further validates positive price structure

* Ahead of key global event of US election, we believe volatility would remain elevated . However, we believe any breather due to the rise in volatility should not be seen as negative, as broader price structure remains robust

* We believe the current breather will help the index to work off the overbought condition in the weekly stochastic currently at a reading of 86 . Hence the current breather should be used to accumulate quality banking stocks

* The index has support base around 23000 levels being the confluence of the (a)38 . 2 % retracement of the current up move 20405 to 24823 placed around 23100 levels . (b) the recent low of mid October 2020 is also placed around 22970 (c) the 50 days EMA is placed around 23000 levels

* In the coming sessions, the index is opening on a negative note on the back of soft global cues . We expect volatility to remain high on account of volatile global cues .

* As the index is placed near the lower band of the last seven session range . Hence after a negative opening use dips towards 23790 -23860 for creating long position for target of 24070 with a stoploss of 23690

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ICICI Securities

Published on 30/10/2020 12:09:38 PM

NSE (Nifty): 11671

Technical Outlook

* Equity benchmarks extended losses over a second consecutive session and concluded October series derivative expiry session on a subdued note. The Nifty ended the session at 11671, down 59 or 0.5%. Market breadth remained negative with A/D ratio of 1:1.8. Sectorally, barring IT all major indices ended in red weighed down by auto, FMCG and pharma.

* The daily price action formed a small bull candle with long upper shadow carrying lower high-low and closed at two week’s low (below 11700), indicating extended correction. In the process, volatility remained high as index witnessed over 440 points oscillation throughout the day

* Going ahead, we believe bias would remain corrective as long as the index maintain a lower high-low formation and extend the ongoing price and time-wise correction towards key support threshold of 11500 in coming weeks as it is confluence of 38.2% retracement of last up move (10790-12025), at 11553 coincided with 50 days EMS placed at 11524. Meanwhile, 12000 would continue to act as immediate hurdle as on seven out of fourteen sessions index made failed attempt to surpass psychological mark of 12000, which clearly signifies profit booking at higher levels

* Historically, we have observed that volatility remain elevated ahead of key global event of US Presidential election. Thus, we believe, traction in global market would dictate near term trend of the market. In the process, stock specific action would prevail in domestic market as the Q2FY21 result season pans out

* The Nifty midcap and small cap has been forming a higher base above 50 days EMA (which has been majorly held since June) after approaching its maturity of price and time wise correction. We expect broader market to endure its catch up activity as the sectoral rotation within broader market space would lead to the broadening of market participation which signifies rejuvenation of upward momentum

* Structurally, the index has seen shallow price retracement as over past 13 sessions index has retraced merely 38.2% of preceding 11 session’s sharp up move(10790-12025), indicating robust price structure.

* Thus we believe, ongoing consolidation would set the stage for next leg of up move In the coming session, holding above Thursday’s low (11606) would keep technical pullback option open, else extended correction amid stock specific action. Hence, intraday dip towards 11592-11616 should be used to create long position for target of 11708

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ICICI Securities

Published on 29/10/2020 11:12:43 AM

Bank Nifty: 24232

Technical Outlook

* The Bank Nifty continue to trade with high volatility as it gave up most of its previous session gains and closed down by more than 2 % on Wednesday . The decline was broad based as 11 out of the 12 index constituents closed in the red . The Bank Nifty ended the session at 24232 , down by 537 points or 2 . 2 % 

* The daily price action formed a bear candle which remained contained inside previous session high -low range, indicating breather as the index failed to move above last six sessions range (24800 -23800 ) and gave up most of its previous sessions gain . We expect the index to continue with its current breather in the coming sessions .

* Post faster retracement of the last falling segment as four sessions decline (24190 -22970 ) was completely retraced in just two sessions . The index has spent past six sessions retracing the sharp up move of mid October (22971 -24823 ) by just 50 % . The shallow price retracement further validates robustness of price structure

* Ahead of key global event of US election, we believe volatility would remain elevated . However, we believe any breather due to the rise in volatility should not be seen as negative, as broader price structure remains robust

* We believe the current breather will help the index to work off the overbought condition in the weekly stochastic currently at a reading of 87 . Hence the current breather should be used to accumulate quality banking stocks

* The index has support base around 23000 levels being the confluence of the (a)38 . 2 % retracement of the current up move 20405 to 24823 placed around 23100 levels . (b) the recent low of mid October 2020 is also placed around 22970 (c) the 50 days EMA is placed around 23000 levels

* In the coming sessions, the index is opening on a negative note on the back of muted global cues . We expect volatility to remain high on account of volatile global cues and Monthly expiry . Hence after a negative opening use pullback towards 24310 -24370 for creating short position for target of 24080 with a stoploss of 24470

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ICICI Securities

Published on 29/10/2020 11:12:27 AM

NSE (Nifty): 11730

Technical Outlook

* Equity benchmarks edged lower on the back of weak global cues. The Nifty ended the session at 11730, down 160 or 1.3%. Market breadth turned negative with A/D ratio of 1:1.9. Sectorally, all major indices ended in red weighed down by financials, pharma and metal 

* The daily price action formed a bear candle encompassing Tuesday’s small bull candle. As a result, index formed a subsequent bull and bear candle in a row, indicating lack of faster retracement on either side that signifies extended breather.

* In the coming sessions, index is likely to open on a negative note tracking weak global cues. However, post gap down opening it would be prudent to watch mid-October low of 11660, as holding above 11660 (on a closing basis) would lead to continuance of consolidation in the choppy range of 12000 -11700. Failure to do so, would lead to extension of price and time-wise correction towards key support threshold of 11500 in coming weeks. Meanwhile, 12000 would continue to act as immediate hurdle as on seven out of thirteen sessions index made failed attempt to surpass psychological mark of 12000, clearly indicating profit booking at higher levels.

* Ahead of key global event of US Presidential election, volatility would remain elevated. Thus, we believe, traction in global market would dictate near term trend of the market. In the process, stock specific action would prevail as the Q2FY21 result season pans out.

* We believe, broader market would endure its catch up activity by relatively outperforming the benchmark as the sectoral rotation within broader market space along with strengthening of market breadth (as currently ~66% of Nifty Midcap and Small cap index components are trading above 200 days SMA compared to last month’s reading of 62%) would lead to the broadening of market participation which signifies rejuvenation of upward momentum, auguring well for durability of ongoing up move

* Structurally, the index has seen shallow price retracement as over past 12 sessions index has retraced merely 38.2% of preceding 11 session’s sharp up move(10790-12025), indicating robust price structure.

* This makes us believe 11500 would act as strong support base as it is confluence of: i) as per change of polarity concept earlier breakout area of 11500 would now act as immediate support ii) 50% retracement of last up move (10790-12025), at 11408 In the coming session, volatility would remain high owing to monthly derivative expiry session. We believe, the breach of mid October low (11660) would lead to extended correction. Hence, intraday pullback towards 11748-11770 should be used to create short position for target of 11661

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ICICI Securities

Published on 29/10/2020 11:11:44 AM

Technical Outlook

Equity benchmarks edged lower on the back of weak global cues. The Nifty ended the session at 11730, down 160 or 1.3%. In the coming session, volatility would remain high owing to monthly derivative expiry session. We believe, the breach of October low (11660) would lead to extended correction. Hence, intraday pullback towards 11748-11770 should be used to create short position for target of 11661.

In the coming sessions, index is likely to open on a negative note tracking weak global cues. However, post gap down opening it would be prudent to watch mid-October low of 11660, as holding above 11660 (on a closing basis) would lead to continuance of consolidation in the choppy range of 12000 -11700. Failure to do so, would lead to extension of price and time-wise correction towards key support threshold of 11500 in coming weeks. Meanwhile, 12000 would continue to act as immediate hurdle as on seven out of thirteen sessions index made failed attempt to surpass psychological mark of 12000.

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ICICI Securities

Published on 29/10/2020 11:11:10 AM

Rollover Highlights

* Nifty rolls were near 54% vs. 3M average of 57%

* Marketwide rolls were at 76% against the 3M average of 75%

* Highest rollover was seen in Siemens, Federal Bank, IDFC First Bank, Havells and LIC Housing Finance

* Rollover activity was relatively low in Coforge, Petronet LNG, Godrej Consumer Products, NMDC and Chola Finance

* Among index stocks, Grasim (94%), JSW Steel (93%) and Adani Ports (92%) are witnessing high rolls into the next series while L&T (62%), TCS (64%) and ONGC (66%) are seeing relatively low rollover into the November series

* The open interest in the Nifty has increased marginally amid higher additions in the November series. During the last session, October series saw closure of 1.7 million shares while mid month saw addition of more than 2 million shares. However, the roll spread has remained under pressure but positive near 10-15 points throughout the session. We believe the roll spread would remain stagnant and may increase towards settlement

* The open interest in the Bank Nifty saw marginal increase in open interest and both near as well mid month saw change of 0.3 million shares. However, the roll spread in the banking index has remained under pressure and roll spread has turned negative suggesting rollover of short positions. We believe roll spread will stay under pressure towards settlement as short rollover is likely to be seen

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ICICI Securities

Published on 28/10/2020 12:23:40 PM

Bank Nifty: 24769

Technical Outlook

* The Bank Nifty lead by the private banking stocks witnessed sharp up move and closed higher by ~ 3 % on Tuesday . The private banking heavyweights clearly outperformed as the private bank index closed higher by more than 3 % . The Bank Nifty ended the session at 24769 , up by 694 points or 2 . 9 % 

* The daily price action formed a sizable bull candle with a higher high -low as the index recouped its previous three sessions decline in just one session . The index is currently placed at upper band of the last five sessions range (24820 -24000), a follow trough strength above the same will lead to extension of the up move towards the August high of 25230 in the coming sessions .

* Post faster retracement of the last falling segment as four sessions decline (24190 -22970 ) was completely retraced in just two sessions . The index has spent three sessions retracing the sharp up move of mid October (22971 -24823 ) by just 50 % . The shallow price retracement further validates robustness of price structure

* The short term structure in the index remain firmly positive, we believe the index will surpass its August high of 25230 and head towards the major resistance area of 26300 -26500 in the coming months as it is the 61 . 8 % retracement of the entire decline (32613 -16116 ) and the previous major breakdown area of March 2020 placed around 26500 levels

* Ahead of key global event of US election, we believe volatility would remain elevated . However, we believe any breather due to the rise in volatility should not be seen as negative, as broader price structure remains robust .

* The index has major support base around 23000 levels being the confluence of the 38 . 2 % retracement of the current up move 20405 to 24823 placed around 23100 levels and the recent low of mid October 2020 is also placed around 22970 .

* In the coming sessions, the index is opening on a flat to negative note on the back of soft global cues . We expect volatility to remain high on account of volatile global cues . Bias remain positive as the index is forming higher high -low . Hence use intraday dips towards 24580 -24640 for creating long position for target of 24860 with a stoploss of 24480

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ICICI Securities

Published on 28/10/2020 12:23:18 PM

NSE (Nifty): 11889

Technical Outlook

* Equity benchmarks recouped some of Monday’s decline and ended Tuesday’s session on a positive note at 11889, up 122 or 1%. Market breadth turned flat with A/D ratio of 1:1. Sectorally, barring IT and realty all other indices ended in green led by financial and pharma. 

* The daily price action formed an inside bar as index oscillated within Monday’s trading range (11942-11711). Lack of follow through weakness signifies inherent strength as supportive efforts emerged at 20 days EMA at 11740. In the process, the index retraced 80% of Monday’s fall (11942-11711), at 11896

* Going ahead, we expect the broad based consolidation (12000- 11500) of the index to get prolonged amid stock specific action in the October series derivative expiry week. We believe volatility would remain elevated ahead of US Presidential election.

* Thus, we expect index to extend the price and time-wise correction towards key support threshold of 11500 in coming weeks. Meanwhile, upside will be temporarily capped at 12000 as over past two weeks on six occasions index made failed attempts to sustain above the psychological mark of 12000

* The Nifty midcap and small cap indices have been sustaining above their 50 days EMA since June, indicating inherent strength.

* Meanwhile, the Nifty has already surpassed its August highs of 11794. We expect catch up activity to continue in broader market as the sectoral rotation within broader market space along with strengthening of market breadth (as currently ~68% of Nifty Midcap and Small cap index components are trading above 200 days SMA compared to last month’s reading of 62%) would lead to the broadening of market participation which augurs well for durability of ongoing up move

* Structurally, the index has seen shallow price retracement as over past 11 sessions index has retraced merely 38.2% of preceding 11 session’s sharp up move(10790-12025), indicating robust price structure. This makes us believe 11500 would act as strong support base as it is confluence of: i) as per change of polarity concept earlier breakout area of 11500 would now act as immediate support ii) 50% retracement of last up move (10790- 12025), at 11408

* In the coming session, we expect Nifty to trade firm above 50% retracement of Tuesday’s up move (11711-11899), at 11805 amid stock specific action. Hence, intraday dip towards 11820-11842 should be used to create long position for target of 11929

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